Expanding government-funded childcare in England

At the 2023 spring budget, the previous government announced the entitlement to 30 hours of government-funded childcare for three and four-year-olds with working parents in England would be extended to younger children:

• Since April 2024, eligible two-year-olds have been able to access 15 hours a week (570 hours a year).
• Since September 2024, eligible children have been able to access 15 hours a week (570 hours a year) from nine months until they turn three (from the age of three, eligible children can access 30 hours under the existing 30 hours entitlement)
• From September 2025, eligible children will be able to access 30 hours a week (1,140 hours a year) from nine months until they start school.

To be eligible for the expanded entitlements, a person, and their partner if they have one, must generally expect to earn the equivalent of at least 16 hours a week at the National Living Wage.

While many stakeholders welcomed the announced expansion, concerns were raised that the funding committed may not be sufficient and there may not be enough childcare places to meet increased demand.

Impact on families and employment

The previous government said the expansion would save families “an average of £6,900 per year” and would enable parents “to work sooner to support their families and progress their careers.”

The Office of Budget Responsibility estimated that by 2027/28 the expansion will result in around 60,000 people entering employment (PDF).

The Institute for Fiscal Studies (IFS) has suggested the most obvious effect of the expansion “will be to change who pays for formal childcare that eligible families were planning to use anyway.” It estimated the reforms will benefit around half of parents with a child aged nine months to two-years, including 20% of families earning less than £20,000 a year, but 80% of those earning more than £45,000 a year.

Funding the expansion

The expansion is expected to lead to spending on the childcare entitlements increasing from around £4 billion in 2023/24 to over £8 billion in 2027/28.

The IFS has noted that, as a result of the expansion, the government will control the prices of around 80% of pre-school childcare (up from around 50%). It says this increases the importance of getting the funding rates right. The IFS says the current funding rates should mean that at a national level “the average provider will not lose out from offering the entitlements.” However, it has also emphasised the importance of looking at how funding rates keep up with rising costs.

Creating additional childcare places

The Department for Education estimates around 70,000 new childcare places and 35,000 additional staff (headcount) will be required by autumn 2025 (compared to a December 2023 baseline) to meet the additional demand created by the expansion.

The government has committed to opening an additional 3,000 school-based nurseries to meet the extra demand. In April 2025, the DfE announced that in the first round of funding, £37 million was being provided to open 300 nurseries. It added that up to 4,000 additional places would be available by September 2025.

At the Spending Review 2025, the government said it would provide £370 million over the next four years to support the creation of school-based nurseries.

The IFS has said the plans for school-based nurseries would “fully meet the expected increase in demand” from the expansion at a national level. However, it has highlighted that only one tenth of the additional places are likely to available by September 2025.

Progress with rollout

At a national level, the first two stages of the rollout appeared to be in line with the introduction of the 30 hours entitlement for three and four-year-olds in 2017.

However, stakeholders, including the National Audit Office, have highlighted that the September 2025 phase of the expansion is likely to be more challenging.